The notional cost of Irish borrowing shot to disturbingly high levels on Wednesday. Two-year Irish bond yields rose to 15.30% and 10-year yields 0.88 percentage points to 12.43%, levels which would prohibit a return of Ireland to the markets.

Moody's cut Portugal's government debt rating four notches on Tuesday to "sub-investment" levels and although it said it continues to "differentiate significantly" periphery countries like Ireland "in terms of the credit profile", there are concerns that it won't be long before it downgrades Ireland further.

Irish debt lies perilously close to junk status – Moody's rates it one notch above junk with a negative outlook.

"If Moody's applies the same rationale to Irish debt then they will come to the same conclusion," said Brian Barry, a market analyst at Evolution Securities in London.

The Irish government is still clinging to the notion that it will be able to return to the markets in 2013, but the sentiment of the markets suggests otherwise.